Top Premarket Decliners

Technology stocks advanced pre-bell Friday with the Technology Select Sector SPDR Fund 0.1% higher and the SPDR S&P Semiconductor ETF up 0.2% recently.

Ericsson shares declined by over 9% after the company reported higher Q4 earnings and net sales that still missed market expectations.

Twilio shares rose past 19% after the company said it expects Q4 adjusted earnings per share to exceed its guidance as revenue is estimated to increase by 11% year-over-year. The company also said its board approved a $2 billion share buyback program.

Texas Instruments shares were down more than 4% after the company reported lower Q4 earnings and revenue.

By Dominic Chopping

STOCKHOLM--Ericsson shares slumped to the bottom of the Stoxx Europe 600 index Friday as higher operating costs and weakness in some of its business units dented earnings.

The Swedish telecommunications-equipment company said sales in its key networks unit grew 4% in the fourth quarter as contract wins and network investments by some large customers contributed to a 70% jump in North America sales, but its cloud software and enterprise units both saw sales and earnings decline.

Shares traded 11% lower in afternoon European trade.

Despite the mixed performance, Ericsson said it sees further signs that the overall network market is stabilizing, as customer spending continues to accelerate in North America.

Network vendors such as Ericsson have been waiting for telecom operators in North America to increase their spending after they completed their first phase of 5G network rollouts before other markets and as they worked through stockpiled inventory. Sales in the region rebounded sharply in the third quarter and continued to do so in the fourth quarter, helped by deliveries under a major network contract with AT&T that began last year and will continue into 2025.

India has also largely completed a rapid phase of network upgrades that saw deployments peak in 2023, and operator investments in the country have now normalized, Ericsson said.

"The near-term market recovery is in the hands of our customers, but our confidence in the stabilizing market is growing," Chief Executive Borje Ekholm said on an analyst call Friday. "We are starting to see a change in sentiment."

The company reported an adjusted gross margin in the networks unit of 49.1%, above guidance of 47% to 49%, due to more work coming from higher-margin countries. Improved supply-chain efficiencies and new patent licensing deals also helped.

Ericsson said its broad supply-chain footprint should help it navigate potential tariffs on goods imported to the U.S., if the new U.S. administration moves ahead with them.

Speaking on the analyst call, Chief Financial Officer Lars Sandstrom said the company has production in North America, Latin America, Europe, Asia and India, so it has the opportunity to move production between different sites depending on President Trump's plans.

"Of course tariffs could have an impact going into 2025, but I think we're all waiting a little bit to what is going to happen there," he said, adding that there might also be tariff exemptions for critical products.

Net profit attributable to shareholders in the fourth quarter rose to 4.78 billion Swedish kronor ($434.1 million) from 3.39 billion kronor a year earlier, below the 7.05 billion kronor expected in a FactSet analyst poll.

Sales rose 1.4% to 72.91 billion kronor, in line with FactSet estimates.

The company said restructuring charges rose to 1.6 billion kronor in the quarter, mainly related to redundancies, efficiency measures and right-sizing operations to align with lower demand in some markets.

Restructuring charges for 2025 are expected to remain at elevated levels, it said.

Ericsson expects to report a networks adjusted gross margin of between 47% and 49% in the first quarter, while network sales are expected to grow broadly in line with what is usual for the time of year, it said.

The company proposed a full-year dividend of 2.85 kronor, up from 2.70 kronor in 2023.

Write to Dominic Chopping at dominic.chopping@wsj.com

Technology stocks were flat to higher pre-bell Friday, with The Technology Select Sector SPDR Fund (XLK) inactive and the SPDR S&P Semiconductor ETF (XSD) up 0.2%.

Ericsson shares were down nearly 10% after the company reported higher Q4 earnings and net sales that still missed analyst expectations.

Ericsson reported Q4 earnings Friday of 1.44 Swedish krona ($0.13) per diluted share, up from 1.02 krona a year earlier.

Analysts polled by FactSet expected 2.18 krona.

Net sales for the quarter ended Dec. 31 were 72.9 billion krona, up from 71.9 billion krona a year earlier.

Analysts surveyed by FactSet expected 73.68 billion krona.

The company fell more than 7% in Friday's premarket activity.

By Steve Goldstein

Ericsson shares slumped Friday as the telecom equipment maker missed on fourth-quarter profit due to its struggling enterprise division.

Ericsson said its fourth-quarter profit rose 43% to 4.9 billion Swedish krona ($450 million), or 1.44 SEK per share, as sales edged up 1% to 72.9 billion krona. The earnings missed the Visible Alpha-compiled consensus of SEK2.41 a share, though revenue was basically in line versus the 72.6 billion krona estimate.

The company saw a big boost from winning a key AT&T (T) contract, as sales in North America jumped by 54%. But there was double-digit sales declines in Southeast Asia, Northeast Asia and the Middle East and Africa.

Analysts said Ericsson's enterprise division was the weak spot, and the company said its priority there is to stabilize the commercial performance. Ericsson so far has written down about $4 billion of the $6.2 billion acquisition price of Vonage.

Ericsson shares (SE:ERIC.B) (ERIC) fell as much as 10% in Stockholm trade. Its rival Nokia (FI:NOKIA) (NOK) declined 2% in Helsinki trade.

-Steve Goldstein

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Ericsson's fourth quarter revenues were in line with consensus but Ebita was 8%-10% below, and based on outlook comments, UBS expects minor changes to 2025/2026 consensus, analyst Francois-Xavier Bouvignies writes. Based on industry experts Dell'Oro, Ericsson estimates the 2025 radio access network equipment market should grow by 0 to 2% in 2025, versus consensus at 5% growth year-on-year for network revenues. "Following stock up 9% year-to-date and 61% in one year, we believe weaker fourth quarter EBIT and unchanged 2025/2026 outlook is likely to put some pressure on the share relative to market." Shares fall 8.4% to 89.46 Swedish kronor. (dominic.chopping@wsj.com)